Factors influencing the effectiveness of performance measurement systems

Abstract

Purpose The purpose of this paper is to examine the association between the use of multidimensional performance measures and four organizational factors with the effectiveness of performance measurement systems (PMSs). Design/methodology/approach Data were collected by mail survey questionnaire from a random sample of 455 senior financial officers in Australian manufacturing organizations. Findings The results reveal that the use of multidimensional performance measures is associated with two dimensions of the effectiveness of PMSs (performance and staff related outcomes). The results also reveal that organizational factors were associated with the effectiveness of PMSs. Specifically, top management support was found to be associated with the effectiveness of PMSs in respect to the performance related outcomes, and training was associated with the staff related outcomes. Practical implications The findings provide managers with an insight into the desirable PMS characteristics and the specific organizational factors that they can focus on in order to enhance the effectiveness of their performance measurement system. Originality/value This study contributes to the limited empirical research examining the effectiveness of PMSs regarding the extent to which organizational processes are achieved. In addition, the study provides an empirical analysis of the association between the five perspective (financial, customer, internal business process, learning and growth, and sustainability) BSC model and four organizational factors with the effectiveness of PMSs.